In every service member’s career, whether they serve three or thirty years, whether officer or enlisted, a decision must be made at separation or retirement time, “Should I sell my leave or take it as terminal leave?” I was asked this question many times in my 22+ years working in Air Force Finance. I always answered the same way, “It depends.” There is no one right answer for everyone, it depends on which meets your needs at the time. The better question is “Do I want to quit working earlier and get paid for not working, or do I want to work up until close to the separation date and get paid more money for my leave?” Both have their advantages. Let’s look at how each works and how to determine which is right for you.

Taking Terminal Leave  

Terminal leave is when you take leave at the end of your service career. For example, if your separation date is 20 September and you will have 45 days of leave on the books on your separation date, you can out-process, leave the base, and start your new life on 7 August. You’ll continue to receive your full pay and allowances through 20 September without having to go to work! This is great if you need to job hunt, need to be available to start school, or just want to take the time to transition from military to civilian life while continuing to collect your military pay. You must realize that terminal leave is not guaranteed, is based on the needs of your unit and command, and the number of days allowed may be limited. Each service and command has different practices, so research this early if you intend to use it. This is especially important if you intend to use both terminal leave and the SkillBridge program.  

Selling Your Leave

Many military members like to sell their leave at the end of their commitment. With this option, a service member will work up until or closer to their separation/retirement date and receive a payout of the basic pay for the number of days they do not take and sell back. This option can be good as it puts the most dollars in your pocket. Someone selling leave is still entitled to their full pay and allowances through their separation date PLUS basic pay for the number of days they sell back. Military members may only sell up to 60 days of leave during a career. This holds true even if there is a break in service and the member later rejoins. This happened to me. I separated after four years and sold 10 days of leave. A few years later, I went back on active duty, and when I retired, I only had 50 days available to sell.  

There are two considerations to be aware of when selling leave. Enlisted members may sell leave upon reenlistment or extension of their enlistments. Days sold during a career reduce the number of days available to sell at separation/retirement. Leave is accrued at 2.5 days per month, and it is possible to have that half day on your leave balance as you separate. Since you can’t take a half-day leave, you can only sell it, but you are still limited to the 60-day rule so plan your leave balance carefully when approaching separation or retirement.

When you sell leave, you will be paid at your rate of basic pay. Basic pay is considered a 30-day entitlement, so you will receive 1/30 of a month’s basic pay for each day sold. An E-4 separating after 4 years will receive $89.34 for each day sold, an E-8 with over 24 years would receive $221.91, and an O-5 with 20 years would be paid $369.77 for each day sold.  One-time payments of leave sold are subject to 25% federal withholding and possible state income tax depending on your state.

Everyone’s situation is different when separating or retiring, so make the choice that is better for you and your post-military plans.  Decide if you want to take terminal leave and get paid for not working or serve longer and get paid a little extra for those days you did not take. 

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